Jakarta Post, Indonesia
RI, Pakistan to further expand trade deal
By Linda Yulisman, The Jakarta Post, Jakarta
4 February 2012
Indonesia and Pakistan signed a preferential trade agreement on Friday in a bid to boost bilateral economic cooperation and are expected to expand the trade deal into a free trade agreement in the near future.
Under the agreement, Indonesia offered reduced tariffs to Pakistan on 216 tariff lines, including fresh fruit, cotton yarn, cotton fabrics, ready made garments, fans, sporting goods and leather goods.
Pakistan, on the other hand, has extended preferential rates on 287 tariff lines of Indonesian products, such as crude palm oil and its derivatives, sugar confectionery, cocoa products, consumer goods, chemicals, tableware, kitchenware, rubber products, wood products, glassware products and electronics items.
Indonesian Trade Minister Gita Wirjawan said that the pact would allow greater flow of goods and commodities between the two countries and enhance cooperation that had long existed.
“This is the reflection of the deeper economic relation between two brotherly nations. Within that, however, we have to be cognizant to the fact that there is the opportunity, because Pakistan serves as a transportation hub for other neighboring countries — Afganistan and the rest of Central Asian countries,” Gita said during a press conference at the signing ceremony at the Trade Ministry.
Pakistan Ambassador to Indonesia M. Sanaullah, who represented the Pakistan Minister of Commerce Makhdoom Amin Fahim, said that the agreement would provide opportunities and a win-win situation for business people of both nations.
“Both parties have agreed to provide market access by granting tariff concessions and removing non-tariff barriers and also help both countries to match the economic and trade relations to their true potential,” he said.
He added that following the trade deal, both countries agreed to further step up cooperation by initiating a free trade agreement with early talks expected to take place following a planned visit of the trade minister to Pakistan soon.
Trade Ministry director general for international trade cooperation Gusmardi Bustami said that the reduction of tariffs would likely start in March after the two countries exchange notifications on completion of their legal procedures.
After becoming effective, the agreement would allow Indonesia to sell its main export commodity — palm oil — at 15 percent margin of preference on the applied Most Favored Nation (MFN) tariff, which would be the same rate with Malaysian palm oil, while allowing Pakistan to enjoy a zero percent duty on its principal commodity, kino oranges, he said.
At present, Pakistan imposes a tariff of 9,500 to 10,800 Pakistani rupees (US$105.06) per metric ton on Indonesian palm oil, much higher than tariffs on palm oil from Malaysia, which had already earlier inked a similar agreement PTA with Pakistan.
Data at the Trade Ministry shows that during January-November last year, bilateral trade amounted to $1.02 billion, up 50.18 percent from 2009.